Won Snaps Three-Day Advance as U.S. Retail Sales Boost Dollar

South Korea’s won fell for the first time in four days as the dollar advanced following better-than-estimated U.S. retail data.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, snapped a three-day loss yesterday after a report showed retail sales in the world’s biggest economy rose 0.7 percent in November, compared with the 0.4 percent gain estimated in a Bloomberg survey. The won also fell as the yen declined before elections in Japan forecast to renew Prime Minister Shinzo Abe’s mandate for economic policies that have weakened the currency.

The won dropped 0.2 percent to 1,103.14 per dollar, paring its weekly advance to 1 percent, according to data compiled by Bloomberg. The currency was little changed against the yen at 9.28, after touching a six-year high of 9.14 on Dec. 8. The yen and the won tend to track each other because companies in Korea and Japan compete in export markets.

“The dollar rebounding after recent corrections is weakening the won,” said Park Dae Bong, a Seoul-based currency trader for Nonghyup Bank. “There is also caution against the won’s strength versus the yen, and authorities may continue smoothing operations to curb gains.”

Japan’s Kyodo News reported earlier this week that Abe’s Liberal Democratic Party may win more than 300 of 475 lower house seats in the Dec. 14 election.

Government bonds rose for a second day after Bank of Korea Governor Lee Ju Yeol signaled the central bank’s 3.9 percent growth forecast for 2015 will be lowered, spurring speculation that borrowing costs will be cut further. The BOK held the seven-day repurchase rate unchanged at 2 percent yesterday, after reductions in August and October.

The yield on the benchmark 10-year bonds was little changed at 2.70 percent, Korea Exchange prices show. It dropped three basis points for the week. The three-year yield declined one basis point, or 0.01 percentage point, today and dropped five basis points since Dec. 5 to 2.12 percent.

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